Tax free income always sounds good to me! What do you think? Everyone loves to pay taxes! Don’t they? How would you like to earn tax free income? Taxes are going up if not now, soon. It is inevitable! Here are ten examples of how you can earn extra income tax free!
Buy a Fixer-Upper – You are probably going to buy a house or condominium in the near future. The price of homes is near the lowest point in years. You could buy a foreclosure, short sale or the worst house in a good neighborhood and fix it up. Many years ago, I bought a house which needed a lot of work and saved roughly 25%. I painted, refinished the hardwood floors, installed new window coverings and sold it three years later for double the original price. If you lived there for 2 out of 5 years, you can exclude $250,000 in profit ($500,000 on a joint return).
Expense Reimbursement – If your employer pays your expenses, that is tax free to you. My employer wanted me to travel overseas for business; he paid for my passport and credit card annual fee. Many employers pay for training, tuition, books, cellular phones and telephone service, internet service, professional memberships, uniforms, and entertaining clients. All these things are expenses for the company and reimburse employees for expenses which are tax free income.
Credit Card Rewards – You may think of yourself as lucky or it is a chore for you to travel for your company. Either way, you can collect frequent flier miles, hotel rewards and rental car rewards. In most cases, you can use those rewards for personal travel or upgrade business travel. If you travel frequently or infrequently those rewards are in your personal accounts. It is up to you how you use it. Using the miles, hotel reward or rental car rewards are tax free. In many cases there a nominal fees to use them.
Rent your House for 14 Days or Less – Renting your house for fourteen days or less may be difficult unless you do it while on vacation. If you have a second home, you may rent it for fourteen days or less and the income is totally tax free. If you live in an area which is in demand such as the beach, a city that tourist visit or in a resort area, this is a definite possibility.
Apartment Manager – When I owned apartment buildings I needed a resident manager. In all cases, I subsidized the rent for the manager at smaller buildings or a free apartment at a larger building. The manager in exchange for free rent would collect rent, report problems and do minor repairs. Since housing costs can represent a large part of any one’s budget, living tax free is a huge benefit.
House Sitting – When we go on vacation, we will have someone stay at our house to water the plants and walk the dog. We generally pay them for this service; however you can house sit and move from one assignment to the next. There is a need for this service for a variety of reasons. You can occupy a house for sales to keep up appearances and make it more marketable. This an opportunity to avoid housing costs and it is tax free.
Carpool Income – If you run a carpool, any profit after you r expenses (gas, maintenance) is tax free. Normally, commuting expenses are not tax deductible. You have an opportunity to reduce your personal expenses by forming a carpool. I did this some time ago covering my operating expenses and a portion of my car payment.
Cash Back Credit Card – A cash back credit card allows you to receive a discount on your purchases in the form of a annual check. Costco (American Express) issues a check to me annually as a rebate on my purchases. This is tax free and it reduces your expenses.
Go to Work for the Government – You can join the Federal government and after ten years have your college debt forgiven. Normally when debt is forgiven it is taxable, however this is a perk for public service. This is another example of tax free expense reimbursement.
Be a Landlord –You can buy income property such as an apartment building and earn income which can be tax free. If you invest you r money in income property, you expect to make a profit or return on your investment. Typically, you will earn 7-10% profit and thanks to depreciation it will be tax free. “My Journey to Success” describes some of my experience with income property for twenty years where I earned tax free income. Any profit when I sell was taxed as capital gains.
I described ten examples of tax free income that is available with very little effort. I personally used seven of these examples. It is a great way of increasing your income and reducing your expenses. Taxes will be increasing, this is an excellent way for you avoid higher taxes. What do you think? What are you going to do? Isn’t tax free income good?
Photo by: John-Morgan